New tax codes passed as part of the Big Beautiful Bill could result in new retirement planning opportunities.
“There are a lot of implications to moderate income retirees,” says Julie Fortin, partner at Northstar Financial Planning in Windham.
The legislation includes more deductions, including a new deduction for seniors and an expanded deduction for state and local taxes. Those, in turn, lower a person’s adjusted gross income, potentially putting them into a lower tax bracket. While lower taxes are good for anyone, they’re particularly advantageous for people who have retired, but have not yet started taking mandatory distributions from their retirement accounts. “There are some great opportunities in those years,” Fortin says.
Having a lower income during those years opens the door to a strategy called a Roth conversion: withdrawing money from a typical retirement account (like a 401(k) or IRA) to a Roth IRA, explains Fortin. That’s important because while traditional retirement accounts are tax-deferred, meaning people pay tax on withdrawals, Roth IRA withdrawals are not taxed as long as certain requirements are met. Roth IRAs also aren’t subjected to required minimum distributions, giving you greater control over you assets. “A lot of our clients try to take advantage of doing some Roth conversions,” Fortin says.
Here are the changes in the Big Beautiful Bill that could inform your tax and retirement strategy this year.
A New Deduction for Seniors
One of the biggest impacts for seniors is a new $6,000 per person deduction. It allows individuals making up to $75,000 to deduct that amount. For someone in the 22% tax bracket (individuals with an adjusted gross income of about $47,000 to about $100,000), the deduction will result in a savings of $1,320, says Patricia Morse, principal CPA at TSS Advisors in Lebanon.
The deduction also opens an opportunity for Roth conversions by lowering seniors’ taxable income.
“The $6,000 below-the-line deduction gives people more capacity to look at things like Roth conversions and being able to convert some of their retirement savings into more tax efficient accounts,” says Ryan Callaghan, partner and chief investment officer at Harbor Group in Bedford.
The deduction phases out as income increases, Morse notes, but “Your average Joe who is living on social security and a pension will get a $6,000 deduction.”
More Ability to Deduct State and Local Taxes
The bill also increases the amount of state and local taxes that people can deduct from their federal return, experts say. This is known as the SALT (state and local tax) deduction, which was previously capped at $10,000. Now, most filers who itemize their deductions can deduct up to $40,000 in state and local taxes paid, says John Orcutt, who teaches law and tax at the University of NH’s Franklin Pierce School of Law. People making more than $500,000 will see that cap lowered, but “most individuals who itemize will be able to deduct up to $40,000 in state and local taxes,” Orcutt says.
This could lead more people to itemize deductions, since you can’t take the standard deduction and get the SALT deduction, Morse explains, adding the increased limit will be a benefit for many property owners, especially given NH’s high property taxes. “People that are on fixed incomes who are paying property taxes will definitely benefit from that,” she says.
Changes to Charitable Donations
The bill could also impact how people give. Taxpayers can take the standard deduction and still deduct an additional $1,000 in charitable expenses, Fortin says.
To itemize charitable giving, you must hit a certain threshold of donations compared to income. Because of that, it may make more sense to batch charitable giving, making one large donation that can be itemized, rather than making smaller donations each year, Fortin notes.
Allowances for Estate and Gift Tax
The bill increased the Federal estate and gift tax exemption to $15 million per individual for 2026. This amount will be adjusted annually for inflation starting in 2027. This increased exemption is permanent. However, the change won’t impact most Granite Staters.
“That really benefits people with larger estates,” says Deborah Bailin, an attorney with Bailin Sloat Law in Manchester.
Families with large estates have worked around the exemption cap in the past by dividing their assets into more than one trust, Callaghan says, but now “they can usually just do one family trust.”
Other Business Changes
In addition to the personal tax changes above, the One Big Beautiful Bill Act could impact business taxes, Orcutt says. The bill includes the restoration of bonus depreciation, which allows businesses to deduct up to 100% for the depreciation of qualified property. It also makes permanent a 20% deduction for non-corporate taxpayers with pass-through business income including sole-proprietorships, partnerships, and S corporations), among other changes.
Compared to tax changes in 2017, the changes this year are “less significant,” Orcutt says, and yet “there are some provisions that your average Joe will be very happy about, such as the ability to deduct up to $25,000 in qualified tip income, up to $12,500 in qualified overtime compensation, and up to $10,000 of interest on qualified passenger-
vehicle loans.”
Federal Tax Changes At A Glance
Here are a few of the biggest changes likely to impact taxpayers come April:
Deduction for seniors
People ages 65 and older can claim a new deduction of up to $6,000 per person. This phases out for people making over $75,000 annually.
Bigger deductions for state and local taxes
The bill allows people earning less than $500,000 to deduct up to $40,000 in state and local taxes, an increase from the previous $10,000 deduction.
No tax on tips
This much talked-about provision allows people making $150,000 or less to claim up to $25,000 in tips without being taxed on that income.
No tax on overtime
People making $150,000 or less can earn up to $12,500 in overtime time pay without being taxed. If a person makes time and a half while working overtime, only the “half”—the overtime portion—is untaxed.
Deduction for certain car loan interest
People making up to $100,000 can deduct up to $10,000 in car loan interest, in some situations. The deduction applies to loans for new cars that have their final assembly in the U.S. and it’s only for loans that originated in 2025 or later.
Increased child tax credit
The bill made permanent the child tax credit amount established in 2017 and increased it by $200 to $2,200 per child.
Sources: Internal Revenue Service, The Tax Foundation, and the Bipartisan Policy Center
